Navajo Nation aims to reopen embattled factory

SHIPROCK — Navajo Nation officials are planning to restart operations with new leadership at BCDS Manufacturing after missed loan payments resulted in the ouster of the Shiprock factory's CEO.

BCDS stopped making payments on the loan in July. In October, the company's board put CEO Hak Ghun on unpaid administrative leave.

Within 60 days, Economic Development Director Allan Begay hopes to have a new contract for the metal and fiberglass fabrication plant.

"Work is going to resume. There's a capacity in place there," Begay said. "We have some pretty good ideas now."

Once the factory is working again, Begay said, its profits will pay off a $2.2 million loan taken out last year by BCDS and backed by Nation money.

BCDS would reopen under the leadership of a current employee. Though unidentified, the employee is one of four still employed at the factory since major operations shut down about six months ago, Begay said. The first contract would be non-governmental, but within three to six months Begay hopes to secure a government military contract, following Ghun's business plan.

The Economic Development division will do an independent audit in addition to the audit under way in the Auditor-General's Office, said Council Delegate LoRenzo Bates, a member of the Budget and Finance Committee.

"Allan Begay came before the budget and finance committee and presented a letter from the president's office saying do it this way, do this, do that," he said.

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That committee approved auditing the company in October to explain how the loan was spent. The second audit, Begay said, will be a more general audit detailing profits, revenues and losses.

Ghun originally applied for the loan to build an addition to the factory. Instead of paying for the addition that was never built, Ghun said he spent it on inventory that included a $1.2 million reverse osmosis system.

Begay said the Nation will sell the system, which he has yet to see, and use the money to pay down the loan.

The economic development division took over loan payments in July. Reversing previous statements signaling there was no money to keep paying, the department made another $15,000 payment this month at the instruction of the president, Begay said.

Nonpayment and the resulting default would force the Nation to forfeit $2.2 million from the Navajo Dam Escrow account used as collateral.

"We'll find out exactly what the situation is when the auditor-general completes the audit," said George Hardeen, spokesman for President Joe Shirley Jr. "In the meantime, the Navajo Nation doesn't want to default on that loan."

Though at least $275,000 in property improvements have been made in the four years since the factory opened, Begay said the equipment and inventory don't appear to add up to the $2.2 million.

"We'll see when the audit gets done," he said.

Classified ads calling for bids began running in several newspapers last week, and quotes are due Nov. 5. The audit will take at least two months after that to complete and be paid for by economic development.

The Navajo Nation owns 51 percent of the company, a split Ghun said he engineered. What will happen to the 49 percent that still belongs to Ghun and his shareholders, and the $3 million he said he's invested in the company, is still unclear.

The approximately 25,000-square-mile reservation is home to only one other manufacturing firm.

"If you look at imports and exports, we import probably about 90 percent of goods from the outside, including Farmington. We need to get into production mode," he said. "The Navajo Nation has to get into the mode of producing things, and this is one of them."

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